Getting the Best CD Rates in the Coming Years

Nov15
2011 Leave a Comment

Written by admin

Getting the best CD rates is very hard these days since average CD rates are so low right now. You can get CD rates higher than the average rates by searching online at bank aggregator sites like RatesORama which lists CD rates nationally and CD by state.The FDIC’s national rate cap for 1 year CD rates is only at 0.35%, not much of a return if you ask me so serach for rates above the averages.

There are many different types of certificates of deposit accounts and CD rates tied to those account behave differently. A broker-sold CD can be complex and may carry more risks than purchasing a CD directly from a bank and an offer of very high CD interest rates may be a lure to promote the sale of non-insured products.

When you compare CD rates at banks and credit unions you should make a list of the following, what is the CD rate and CD term. In case you don’t know what a certificate of deposit is with a CD acocunt you agree to keep the money in an account for a set term — a few weeks to several years and if market CD rates have increased, it is not to your benefit to renew at the older CD rate.

If that’s the case, find out if the automatic renewal will be at the “old” interest rate or the current rate at the time of the renewal and will the CD automatically renew at maturity if I don’t withdraw the money so when do I get my money is it like a savings account? In return, the bank agrees to pay you a higher interest rate than you would receive from a checking or savings account then are there options for early access without a penalty.

Check to make sure the CD rates advertised are for and account that is FDIC insured. You might see CD rates issued by a company that is not federally insured and any money invested is at risk so you need to ask when does the CD mature.

Also inquire about any features that may allow you to earn a higher rate if market rates go up in the future but the traditional CD now is only one of the choices and now you may be able to add money to the CD, switch to a higher CD rates.

You can also withdraw money early without a penalty with certain types of CDs which wasn’t the case in the past but many institutions have added innovative programs that give depositors new flexibility with CD accounts.

When investing in a CD think about how long you are willing to leave funds in a CD but also ask what would happen if you needed money back sooner than but also remember that a CD with more flexible terms than a traditional, fixed-rate CD may be offered at lower CD rates although most savers purchase CDs through local banks, firms known as “deposit brokers”.

Therefore it is important to compare bank CD rates at several banks and sometimes negotiate a higher interest rate. Sometimes CD brokers have better CD rates by promising to bring a certain amount of deposits to an institution but as with most financial products and services, it pays to do some research.

Take other precautions before you buy, search and compare the highest CD rates so you may be able to get a good deal on a bank CD sold by a brokerage firm, but it also may come with extra risks and costs and if there is a penalty.

You need to look carefully and decide what makes sense for you some non-bank companies are using the FDIC logo and good name to draw customers in the door for a bank CD.

Sooner or later, they’re going to try to lock them into a long-term investment that may not be in the customer’s best interest and with many investments in the stock market or real estate declining in value, certificates of deposit (CDs) remain some of the safest and most reliable places for your money if you need the money back earlier.

You can arrange that but expect to pay an early withdrawal penalty but before buying a CD from a broker, read and understand the fine print, and make sure you are dealing with a reputable broker and ask will interest rate go up in the future. Shop around and compare rates from many sources to get the best CD rates.

Posted in Economic Forecasts - Tagged Getting the Best CD Rates in the Coming Years

Getting a Loan or Opening an Account at a Bank

Oct29
2011 Leave a Comment

Written by admin

Many Americans do not have a banking relationship, as a result they don’t enjoy earning interest on their deposits. Many more people don’t even realize you can earn interest money and shop for the highest CD rates on certificates of deposit.

Many more people use pawn shops to get loans instead of a bank but these so called lenders, seeing a loophole, began emphasizing loans of 121 days or longer—loans that under the new law are uncapped and which carry annual rates as high as 1,000 percent which is considerably more than the best CD rates, savings account rates available or mortgage rates today for that matter on home mortgage loans which can be calculated with a amortization mortgage calculator.

The need for a checking account is greatly reduced, for instance, when landlords and other service providers accept only cash.When a customer deposits a check and is told that the funds will be available in five business days, the appeal of a check casher that will give them the money right away—albeit at a high cost—becomes clearer, but check on cdrates before you invest your hard earned money.

Even without a loss of privileges, bank policies on overdraft charges and check clearing can drive customers away.Without access to that on-ramp, people are basically living in a cash economy where there’s no opportunity to convert that into wealth.

A 2008 study by Brookings Institution researcher Fellowes found that check cashiers charge an average of $40 to cash a payroll check; he calculated that a full-time worker could save $40,000 over his or her career by switching from check cashers to a lower-cost checking account.

For the most part, they are younger than the over all population, make less money and are less educated.In place of traditional financial institutions,many of the unbanked—along with the under banked, those with only minimal ties to the banking industry rely on alternative service providers.

These providers like check cashers and payday lenders, which typically charge far higher fees.They have not learned financial basics at home as children.Most of the unbanked are making a rational choice, one that often is based on convenience of hours and location of two things the alternative services use to great advantage.

According to the Federal Reserve Board, non white families are four times more likely to do without main stream banking than white families why people don’t have a convenient bank, they find themselves more likely to use high-priced providers like check cashers and pawn shops. Shop around just like you would shop around for the best auto insurance rates when insuring your automobile.

Many have no previous experience with banks and find the idea of learning how they work to be daunting, especially if they don’t speak English well.Some distrust the idea of giving theirmoney to an institution.

Despite the high cost of check cashers and payday lenders, the decision to switch to mainstream banking is not as simple as it might seem.

In Illinois, a 2005 law capped annual interest rates at 403 percent for payday loans of up to 120 days.Some of the unbanked believe they wouldn’t use banking services often enough to justify the cost or trouble of opening a bank account.

Who are the unbanked?There are broader reasons why banks are not central to the lives ofmany consumers, especially in low-income areas.

Yet millions of American households have no relationship with a bank, a disconnect that in the words of Brookings Institution researcher Matt Fellowes denies them“an on-ramp to economic mobility and wealth.

Doing business with these alternative providers can sometimes be very costly for consumers.There are other reasons as well.Race and ethnicity are factors, as well

Posted in Uncategorized - Tagged Getting a Loan or Opening an Account at a Bank

Savings Imbalances when Interest Rates Hit Historic Lows

Oct02
2011 Leave a Comment

Written by admin

This development reassured foreign lenders that investments in periphery countries’ debt instruments would not lose value because of inflation or currency depreciation, and enabled the periphery countries to obtain financing at significantly lower rates than they had been granted before. Lower deposit rates on CD rates will drive the overall savings rate of a county lower. There are savings imbalances when interest rates hit historic lows but hopefully CD rates will be going higher in the coming years.

Show that in the years leading up to 2010, domestic saving in the periphery countries dropped to low levels.As note, Greece, Spain, Ireland, and Portugal have all taken steps to reduce fiscal deficits—albeit at the cost of weakened economic performance.

In fact the highest CD rates for a term of 1 year on a certificate of deposit is less than 2.00%. While in the past, a weaker currency might have boosted export revenues in the periphery, membership in a monetary union now sharply limits this possibility.

In the latter part of their analysis, we consider how the periphery countries will repair their finances while adjusting to sharply reduced access to private foreign capital.In Greece saving fell to just 8 percent of GDP in 2007; while in Portugal the rate fell to 13 percent. The highest savings account rates differ from county to county depending on the current growth rate.

The periphery countries’ increased access to relatively low-cost foreign funds contributed to a sharp rise in spending.The decline in the saving rate was not as marked in Spain but still significant.A second route would be to replace borrowed funds from abroad with increased export revenues. A bubble in real estate has exaserbated the downtrend. Lower today’s mortgage rates will not help the freefall in home prices. In fact mortgage rates today are already at historic lows and home prices continue to fall wordwide.

One route would be to boost national saving by implementing fiscal austerity measures.These saving deficits meant that the periphery countries had to borrow heavily from foreign private investors to support both current consumption and domestic capital expenditures.

The “turn to foreign borrowing,” observe, was facilitated by the countries’ admission to the European Economic and Monetary Union in the late 1990s.The challenge for the periphery countries in the current environment, argue, is to bring spending back into line with national income now that credit risk concerns have prompted foreign investors to halt further lending.

Instead, we note that, “price competitiveness gains must come via a mix of superior productivity gains or wage and price restraints.While foreign borrowing also supported investment spending, that spending was largely channeled into housing and other nontradable sectors that do not yield income to support repayment.

Irish real consumption spending rose 55 percent from 1999 to 20 Meanwhile, over the same period, consumption spending climbed 35 percent in Greece and Spain.

Posted in Economic Forecasts - Tagged Hit Historic Lows, Savings Imbalances, when Interest Rates

The Economy: Interest Rates Staying Low for Now

Jun24
2011 Leave a Comment

Written by admin

The Federal Reserve Board released their most recent statement on economic activity this week. There were no big surprises and the Fed didn’t say anything we all did know already that they continue to keep the Fed funds rate low so mortgage rates today stay low to help housing recover from a bust. The economy is in a soft patch right now because consumers cut back on purchases do to higher gas prices.

Another factor causing a slow down is the tragic events in Japan which caused disruption in the supply chain. The fed said they are keeping the fed funds rate in a targeted range of zero percent to one quarter percent. This well keep interest rates low for now.

The fed’s comments sent bond yields lower this week. Oil reserves are going to be released by the IEA and the US, this sent oil prices down below $90 a barral and 10 year bond yields down to 2.90%.

You can hear Bernanke speak about the economy in the video below.

Posted in Economic Forecasts - Tagged The Economy: Interest Rates Staying Low for Now

Economic Forecast and the Future Direction of Interest Rates

Apr11
2011 Leave a Comment

Written by Alan S.

Back in 2008 the U.S. fell into the deepest recession since the Great Depression. Economic growth was negative only a few quarters but the decline in Gross Domestic Product (GDP) was steep. 3rd quarter 2008 GDP was minus 4.0 percent, fourth quarter GDP was minus 6.8 percent. This caused the Federal Reserve to force interest rates down to record lows, as a result mortgage rates and deposit rates fell to record lows.

The declines wasn’t as bad in the first quarter of 2009. GDP was only minus 0.7 percent, a nice rebound of the steep lows. Part of the reason for the rebound was government spending and the other part was record low interest rates. GDP turned positive again in the second quarter of 2009 and we have had seven consecutive quarters of positive growth.

Growth has returned and will be positive for the foreseeable future but interest rates are still very low. The current Fed funds rate is in a targeted range of zero percent to one quarter percent. This low rate as forced deposit rates down to record lows. CD rates, money market rates and savings account rates are all at record lows.

Loan rates are also at record lows. Mortgage rates, auto loan rates and other loan rates are very attractive right now and are having some affect at stimulating demand.

Interest rates will be heading higher over the next couple of years as the economy improves. 10 year bond yields have already increased quite a bit in recent months, leaving the Treasury yield curve noticeably steeper.

To keep inflation in check the Federal Reserve will increase interest rates as inflation becomes a concern. All deposit rates including savings account rates, money market account rates and CD rates will go higher in 2011 and beyond.

Posted in Economic Forecasts - Tagged cd rates, Economic Forecast, fed funds rate, Future Direction of Interest Rates, gdp, inflation, money market rates, savings account rates

Getting the Best CD Rates in the Coming Years

Getting a Loan or Opening an Account at a Bank

Savings Imbalances when Interest Rates Hit Historic Lows

The Economy: Interest Rates Staying Low for Now

Economic Forecast and the Future Direction of Interest Rates

Bank Rates

CD Calculator

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Getting the Best CD Rates in the Coming Years

Getting a Loan or Opening an Account at a Bank

Savings Imbalances when Interest Rates Hit Historic Lows

The Economy: Interest Rates Staying Low for Now

Economic Forecast and the Future Direction of Interest Rates

Bank Rates

CD Calculator

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